Prices soar in Ireland with help for first time buyers and looser lending rules

Property prices across Ireland increased by 8.6% in the year to November 2016, boosted by a scheme to help first time buyers and a loosening of lending rules.

The 8.6% rise compared to 6.9% recorded in October and just 4.2% in the 12 months to November 2015, according to the latest index data from the Central Statistics Office.

In Dublin prices increased by 5.9% with house seeing growth of 5.6% and apartment prices up 9.6% in the same period. The highest house price growth was in South Dublin at 8.3% while the lowest was in Fingal at 3.1%.

Prices in the rest of Ireland increased even more with annual growth of 12.8% with the West recording the greatest rise of 16.7%. Conversely, the Mid-East showed the least price growth with house prices up 8.3%. Apartment prices in the rest of Ireland increased 7.8% in the same period.

Overall, the national index is 31.5% lower than its highest level in 2007. Dublin residential property prices are 32.2% lower than their February 2007 peak, while residential property prices in the rest of Ireland are 35.9% lower than their May 2007 peak.

It means that from the trough in early 2013, prices nationally have increased by 50.3%. In the same period, Dublin residential property prices have increased 65.8% whilst residential property prices in the rest of Ireland are 47.5% higher.

Sales saw a 12.3% increase compared to November 2015 and an increase of 11.8% compared to October 2016 and the total value of the market based on transactions filed in November was €904.8 million.

Overall the average price was €237,842 while in Dublin it was €387,851. Dún Laoghaire-Rathdown was the most expensive with an average price of €545,125 over the 12 month period. Conversely, South Dublin was the least expensive, with an average price of €310,765.

After Dublin, the next most expensive region was the Mid-East where the average market price paid by households was €239,956. Within the Mid-East, County Wicklow was most expensive, with an average price of €311,508, making it the second most expensive county after Dublin.

The least expensive area was the Border region with an average price of €112,656. However, the least expensive county was Count Longford in the Midland region with an average price of €84,595.

Some 24.9% of sales were to first time buyers and transactions in this sector were up by 27.8% compared to November 2015 and an increase of 16.7% compared to October 2016. November is the first month in which the volume of first time buyers has exceeded 900 since December 2014.

According to Davy analysts there is now a real possibility that house prices will rise by more than 10% across the country in 2017. ‘Ireland’s tight housing market and robust economic recovery are already driving sharp price rises, with the government’s help to buy scheme and looser Central Bank lending rules likely to further stimulate house price inflation in 2017,’ said Davy chief economist Conall MacCoille.

Under the help to buy scheme, which has been announced in the Government’s Budget 2017, first time buyers will be able to access a grant up to €20,000 to help with buying a home.

Meanwhile the Central Bank had announced that it will ease the deposit requirements for first time buyers saving for more expensive properties. Buyers previously needed to save deposits worth up to 20% of the purchase price, but they will now only need to come up with 10% to put towards their purchases.

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